NYK President Sees Vessel Capacity Outstripping Demand

The supply of container ship capacity will outstrip the growth in demand for vessel space this year and next as more new container ships are delivered in the two-year period, the president of NYK Line warned.

In his annual New Year’s message Yasumi Kudo said the tight capacity situation that helped carrier profits rebound last year “will not likely recur again for the foreseeable future.”

NYK’s research group forecasts a 7 to 8 percent growth rate in global cargo movement in 2011 and 2012 and a 10 percent annual increase in container capacity for the same two years as a result of the completion of numerous outstanding orders for new container ships.

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“This leaves a widening gap between demand and supply, for which we have to be prepared for some years to come,” Kudo said.

NYK reported recurring profit from liner operations of $182.5 million in the second quarter of fiscal 2010 ended Sept. 30 compared with a loss of $189 million a year earlier, as revenue soared 54 percent to $1.47 billion.

But Kudo said NYK’s profit will drop in the second half of fiscal 2010 because of “the loosening gap between supply and demand.”

The NYK chief said the declining and aging population in Europe, will curtail growth of the Asia-Europe trade, while he said the trans-Pacific trade might be more positive as a result of the growth of the U.S. population.

Kudo said carriers had learned to remove capacity from the market when it exceeds demand, which he said was “the best solution to achieve stable profits.”

-- Contact Peter T. Leach at pleach@joc.com.